Editorial: NYRA runs out of chances

Updated 11:16 am, Friday, May 18, 2012

Naming a new CEO from inside a scandal-ridden regime is too much for regulators.

THE STAKES:

Can NYRA's board assure us that it is on an honest and sustainable course? Or is it time for a change?

In the wake of a scandal that cheated bettors out of $8.5 million, Charles Hayward is gone, thankfully, as the $475,000 CEO of the New York Racing Association. Also out, deservedly, is Patrick Kehoe as the $423,000 general counsel. But the hope that NYRA can demonstrate that it still deserves the public's trust is a long shot.

Monday's announcement by NYRA that its new CEO would be moving up from inside a now-discredited regime is a galling example of an outfit that just doesn't get it. It's almost as if the NYRA board is daring Gov. Andrew Cuomo to move toward revoking its license to run thoroughbred racing.

It's not that Ellen McClain, who had been NYRA's chief operating officer until her hasty promotion, is fundamentally unqualified for her new role. But the board has been silent on what Ms. McClain might have known about the $8.5 million rip-off that occurred while she was in the NYRA executive suite.

Two state investigations are under way, exploring how for months NYRA took more than its legally allotted share of the long-shot bets fancifully known as exotic wagers. Those are reason enough to say that the board acted recklessly in promoting an insider, and hiring a new general counsel who seemingly hadn't been fully vetted. Nobody can say if Ms. McClain and the new general counsel, Kenneth Handal, have the credibility to lead NYRA, especially now.

No wonder there is talk in the governor's office about the need to replace NYRA's 25-member board. What's unclear is if that's an idle threat or if there's any appetite in the Capitol for a clean sweep that might instill more confidence that thoroughbred racing in New York is in clean and capable hands.

Now Mr. Cuomo is using the leverage of cash against the perennially strapped racing association. There's every indication that the state is withholding NYRA's revenues from video lottery terminals — more than $3 million monthly — because the NYRA board failed to clear the McClain and Handal appointments with Cuomo's racing regulators. NYRA says it moved quickly at the express urging of the state Racing and Wagering Board.

Whatever. What's essential is that this back-and-forth not imperil the Saratoga racing season, which NYRA has raised as a threat whenever anybody questions its operations.

What NYRA seems to never grasp is that it is not a private entity free to operate horse racing with abandon. Oversight has to mean something. The state must be prepared to take away NYRA's franchise if its mismanagement isn't addressed.

It would be precipitous of the Cuomo administration to do that now. But the latest scandal and the NYRA board's response to it suggest that a majority of the board may not be doing racing any favors by sticking around.

This was supposed to be a "new NYRA," granted a quarter-century franchise after the "old NYRA" had gone through a criminal indictment and bankruptcy filing. But this crisis of NYRA's own creation suggests that new hands haven't yet taken hold of the reins.

The slot machine money will be back when NYRA is at last under honest and competent management. It's a short-term hardship that signals a state government at the exasperation point.

"Unless NYRA immediately starts to act in the best interests of racing and the taxpayers of this state, we will pursue a course of action to re-establish the racing franchise with a qualified, ethical and responsible steward for horse racing."

We wish the former scenario was the smarter bet, but we're not so sure.